The 2011 Budget in Ireland introduced a new tax on income called the Universal Social Charge (USC) which began in January 2011. This was the last Budget of the Fianna Fail/ Green coalition.
Initially – all individuals were liable to pay the USC if their gross annual income was more than €4004 (€77 a week).

In Budget 2012 – (Fine Gael / Labour) the threshold for paying USC was increased – so that only people on incomes over €10036 a year (€193 a week) paid the charge from January 2012

For PAYE workers – the Universal Social Charge will be deducted from wages. Where the USC has been applied for particular pay period(s) throughout the year but at year end you are ultimately not liable or are liable for a lower rate you will be due a refund of some or all of any Universal Social Charge paid.

Refunds : Where you have been in continuous employment with an employer throughout the year in question (i.e., from 1 January to 31 December), your employer should refund any overpayment of Universal Social Charge deducted at the end of the year. (Check that they do). Where you have not been in continuous employment with a single employer throughout the year- Revenue will deal with any refund .

USC replaced the Health Levy and the Income Levy :

The Health Levy was charged at 4% on all earnings above €26000 up to €75,036 and 5% on earnings over €75,036.

The Income Levy was set at 2% on income up to €75,036, 4% on income from €75,037 to €174,980 and 6% on income above €174,980. (Exempt if Medical Card holder or earning less than €15,028)

There was also an exemption for health levy for people who are getting Widow’s/Widower’s Pension, a One-Parent Family Payment or Deserted Wife’s Allowance from the Department of Social and Family Affairs or a widow’s pension from an EU country.
Will same apply to USC?

My wife and I are UK pensioners living in Ireland. Our joint income is less than that for two Irish people on state pension. I receive 1400 from an Irish private pension. Will we have to pay the USC on pension payments from the UK?

Sorry Matt – I misread your original question.
Irish private pension will both be liable to this USC (assuming your total annual income is over €4004 each) – (The revenue website states that “certain foreign pensions” are exempt from the USC – so it is not clear. Why don’t you claim a state pension from Ireland – it mighy be bigger than the UK one and it would be exempt from USC)

Sneaky move hitting the over 70s medical card holders…..and no talk about it at all. Where are the opposition on this?
It should be resisted for all medical card holders, but in particular over 70s medical card holders who have already paid through their working life for health/social cover.

The words ‘Earnings’ and ‘Income’ seem to be interchangeable in much officialese these days.
I am a married pensioner, my wife and I being both in our late seventies. Our only incomes are from our pensions.
Will we be liable for the USC?

Joe – The Revenue website states that All Dept of Social Protection payments” are not liable for the USC. The Citizens Information site states “Social welfare payments (payments from the Department of Social Protection) and similar payments are exempt from the USC”

It would appear from these statements that the State Pension is exempt – but 100% clarity has been requested .

It says in the Dept FAQ on USC [http://www.revenue.ie/en/press/budget/2011/universal-social-charge-faqs.pdf] that ‘certain foreign pensions’ are exempted ‘under section 200’ What ius section 200? Is it the section of the Act, is the Act published?

The new universal levy as I understand it will have no exemptions for medical card holders or widows.
These people up to now did not pay the health levy. The impact of this on all those affected will be catastrophic and This needs to be put out in the public arena and with the politicians. But are they interested. I will be very badly affected as a widow and I was nearly sick when I saw the implications of this on my pay. It is going to hit in January and so many not aware of it yet.

I had a another look at the “certain foreign pensions” It seems to refer to the tax consolidation act of 1997!! and is , like most of that act, incomprehensible to the non specialist, and is mainly a tidying up act.
OTOH in the Revenue FAQ on levys in Sept 2010 and the FAQ on UCS on the day of the budget the Sept one says EU pensions are exempt but the text has been redacted (it is a cut an paste job) to exclude it for the USC.

I’d say they are trying it on, they’ll be sanctioned by the EU if they discriminate between member states. In addition, pensions are now distributed across the EU, you can accumulate them based on where you worked and paid contributions in the EU, so how can they exempt one pension and apply USC to others?

My parents receive the state pension and my dad has a private pension of 42 euros per week. They both have the medical card. He is 75 years old. Is he liable for the levy? He got a letter from his pension company saying our of a monthly payment of 172.05 he has to pay 3.44. Is this right.

Can you please tell me how the USC is calculated. My husband got his pay slip today and so did my friends husband and we can not work out how it is calculated, no matter what way we work it out it does not relate to what they have been charged.

Hi,
I was wondering if you could clarify something for me. It was my understanding that the USC was to replace PRSI and the Income Levy, however i’ve been deducted both USC and PRSI. Can you explain this to me.. Thanks, Alan

MAry :
In the case of Voluntary maintenance payments : The spouse who receives the payments is not subject to the Universal Social Charge on the maintenance payments they receive.

With Legally enforceable maintenance payments – The spouse who receives the payments is subject to the Universal Social Charge on the portion of the maintenance payments they receive in respect of themselves. Any portion of the maintenance payments paid towards the maintenance of children is not subject to the Universal Social Charge.
So if this is maintenance just for you – then 150 a week will incur USC of 2.88 a week.
Invalidity Pension should be exempt from the USC

My father-in-law (aged 80+) receives his pension every fortnight. The last payment he received was on the 3rd of January for the previous fortnight. He was charged the USC on the total amount whereas I thought that he should only be charged for the portion relating to the period 1st to 3rd Jan i.e. divide total pension by 14, X answer by 3 to calculate USC

In reply to Pat – I think it is the case with USC as with other taxes – that you pay the rate that is in place when you get a payment. All payments made from Jan 2011 will be subject to USC – even if the payments are to cover periods prior to 2011.
For definite confirmation you probably need to contact Revenue – but that is my understanding of it.

As I don’t have any steady work and work as relief, I am paying being paid weekly. This means that my earnings are being hit at the 2, 4 and 7%. My question is this, if my earnings at the end of the year are only say €8,000 will I get a refund on any deductions made at the 4 and 7% charges?

Hugh – Where the USC has been applied for particular pay period(s) throughout the year but at year end you are ultimately not liable or are liable for a lower rate you will be due a refund of some or all of any Universal Social Charge paid.
Where you have been in continuous employment with an employer throughout the year in question (i.e., from 1 January to 31 December), your employer should refund any overpayment of Universal Social Charge deducted at the end of the year. (Check that they do)
Where you have not been in continuous employment with an employer throughout the year in question, Revenue will deal with any refund .
Revenue say there will be a Universal Social Charge Refund Claim Form that will be available to download from http://www.revenue.ie or from Revenue’s Forms & Leaflets Service Telephone 1890 30 67 06
These forms are probably not ready yet though.

Martin – my understanding is that all taxes – including USC – are charged at the applicable rate when payments are made. It doesn’t matter if the wages are for part of Dec – you will be charged the applicable tax and usc in effect on the day the paymnt is made.
Basically – you will be charged USC on the full amount.

Pensioners both over 70. Both on old age pensions which i know are exempt. Query is if one of them had other income of say €60 per week would they be exempt for that or would they have to pay the usc on the 60 the fact that they total income was over 77.

Aine – good question. It is not 100% clear what the situation would be in that example. You would think that no USC would be charged in that case. What may happen is that it will be charged by the private pension provider or employer – and then the pensioner would have to claim a refund at the end of the year.
Let us know if these pensioners do get charged USC .
Contact Revenue and see what they say – let us know the reply . There are plenty more in the same situation.

Norma – you summed it up well. USC does not confer any benefits on anyone paying it. It is just an income tax under another name.
PRSI is supposed to pay towards pensions and benefits – if and when you require them.

Hi, just looking at workings for my first months salary (jan 2011) and the breakdown on the Payroll package shows that I will be paying USC of 2% , 4% and the 7%, how does the system know that I will be going over the €16K threshold this year, or not in my case as I’ll be going on maternity leave for 6 months… Hope you can follow me and look forward to reply.

Deirdre – As far as we are aware – USC is calculated on a weekly basis – what ever your pay is in a given week – the USC is calculated on that. If you end up overpaying in the year – your employer should give you a rebate.

Carol – That 60 a week cannot be the USC – if it is there is something wrong. Have you a payslip from Dec to compare with the latest one – that should show up where the differences come from. Your tax will have gone up a bit – and the USC will be higher than the previous levies – but I would expect a drop of under 20 a week – not 60.

My Gross pay this week on my pay slip is €325.64, my PRSI figure is -€13.35, how is it that I received a net pay amount this week of €338.99.
Surely this isnt correct, as the Gross should be the larger figure and the PRSI should be deducted not added on!
Hope you can help me!

Country Money or Subsistance is an allowance given to workers (generally in the construction sector) who work more than a certain mileage away from home. Say the company is based in Limerick and the workers have a contract in Listowel. This money is tax free and not considered BIK.

Anne – the Revenue guidance states ” Any expense payments which are only a recompense for expenses incurred in the performance of duties, are not subject to the Universal Social Charge. Allowances which are in the nature of pay and are part of an individual’s gross income are subject to the charge.”

My net salary was €2328 pre budget, gross €3500pm. I have a company car so have €555pm added to my pay for BIK. Do I pay USC on the BIK? With all the changes, can you tell me how much I will be down per month please? Have tried to figure it out but the BIK is confusing me!

Hi – can you clarify for me is the first €77 exempt from usc of each week? my accountant told me this and the balance up to €193 which is €116 is payable at 2% – I have spent hours on this as I do wages for 3 firms. It a total maize of instruction. thanks.
Mags

I am a PAYE worker, currently being charged USC. Am i correct in understanding that if my gross pay at the end of the year is less than €4004, I will be redunded all my USC paid for the year?
Regards,
Justin

John – PRSI is nothing to do with USC. Everyone still pays PRSI . The Income Levy and the Health Levy are no longer deducted – the USC replaces them.
Some employers may have lumped the health levy in with PRSI on payslips – which may be causing confusion?

I believe the state pension I receive is not included for USC,,am I right that as a medical card holder with a pension from my company which is about 32,000 a year gross, I will pay USC at 4 percnt top for the full gross figure or does it split like 2 percent for first4000 and 4percent for the rest? thanks

Sid – sorry for the delay.
If you are employed – your UK employer will not be deducting USC
If you have income from other sources you may have to pay USC – but you will need to contact Revenue if you want to check on that 🙂

Breege – according to the Revenue “Any expense payments which are only a recompense for expenses incurred in the performance of duties, are not subject to the Universal Social Charge.
Allowances which are in the nature of pay and are part of an individual’s gross income are subject to the charge.”

No such Luck Stef. Income tax is here to stay – and it will have increased too. USC is just replacing the old Income Levy and Health Levy. These levies were only introduced in the past 3 years – and USC is instead of them. For some people the USC is more than the old levies – but many people are paying less USC than they were paying in levies.

I realise USC is to be paid on all wages after the 1st of January even if the wages were earned in 2010. However I do have a query.

I was due to be paid on December 21st by my empolyer, but due to no error of my own – my forms were submitted correctly and in good time – my claims forms were lost somewhere between my department and payroll and I recieved no payment. When payroll reopen this new year I imediately went to them to get this problem resolved and it was recognised I should have been paid in December and so the majority of my wages were issued in an emergency cheque and I recieved my payslip today with the rest of my pay along with the new USC. Given the circumstances would there be any way to appeal the USC and recieve it back?

Extremely fun to have no money for christmas and now be charged USC due to someone elses mistake.

Niamh – is the USC more than the old health and income levies? It could be the case (if your income is not below 25k a year) . Higher income tax is probably causing the lower pay too. Contact Revenue – see what they say – Contact Details Here

Hi – I’m paying about double USC compared to the old income levie and old health combined (judging from my last full month of earnings from about this time last year – the contract I’m on now began in November and due to the mistake with payroll the only pay I’ve recieved for work has been this year). My earnings last year did not exceed 25k (at least under the old system I could claim back the income levy!). Will keep trying the Revenue – though I’ve been disconnect about 6 times already this morning!

with the USC charge for medical card holders only 4% now do peopel over 70 with a medical card still pay the 4% or are they exempt
someone saw in the Daily Mirror on Friday that pensioners over 70 with medical card are now exempt from usc

I am an Irish citizen who lived in England for most of my working life. I have now retired and am resident in Ireland. My income is made up of a full UK State pension, small Irish State pension, and an occupational pension from the UK company where I spent most of my working life. Does my UK occupational pension come under the exempted “certain foreign pensions”? Secondly, I am assuming both my UK and Irish State pensions are exempt?

I am a registered Irish Tax Payer.income declared every year self declaration Form 11.My total income comes from the UK is paid gross and taxed in Ireland
My wife and I are both over 70 and have Medical Cards.
Will our old age pensions be exempt from USC as will Irish Equivilant.I do understand that my occupational pension will be suject to USC.

My wife and I both have full Medical Cards. She has an Old age Pension and I have a State Pension from DEPT OF Justice Pension. Does this mean that under the new change under the USC that the max i pay is now 4 per cent. Is it to the Revenue one must apply for an overcharge of USC

I pay usc on my wages and also on a private pension which I receive. But according tomy pension provider at end of year all income will be considered and if a shortfall it will be deducted. That’s ok but do you know how this will be done. Or will the revenue write to request it.

Could you please let me know if we need to do anything if in 2012 an employee no longer is required to pay this as below the threshold now that it has been raised. Do we just not pay it or do we need to let Revenue or anywhere know. We paid it last year as threshold was lower.

My husband and I are both over 70 and in receipt of the contributary Old Age Pension. In addition, we have a small occupational Pension of €212.12 per month. A deduction was made by the Pension Provider (Eagle Star) of €4.24 for the January Pension. Surely this is not correct? If I am right, how do I get it changed?

Maragaret – the 4.25 USC is 2% of the 212 occupational pension. The government say that state pensions are exempt from the USC – but it is still used to calculate your total income – and that brings you over the USC threshold. State Pension is not disregared for USC purposes – but no USC is charged on it. Hope that helps?

I receive €10,816.00 p.a. on a community employment scheme. Also I have a New Ireland Annuity of €175.03 per month. My Jan 2012 net payment from New Ireland was €91.02 (USC €12.25;PAYE €71.76)
I have now requested Revenue to allocate €421.00 of my yearly tax credits to New Ireland. Should I be liable at all for the USC? Is my CE payment used in calculating my total income? Finally is net deposit interest after DIRT has been paid considered Income liable for the USC? Thank you.

I have been working on a temporary contract from April 2011 to January 2012. I have been paying statutory tax and USC charges. Am I entitled to a refund as I am now unemployed for any of tax paid within current financial year?